By Bizodisha Bureau, Bhubaneswar, October 19, 2019: Odisha is all set to mop up in excess of Rs one trillion in revenue through auction of around 30 mines over the lease period of 50 years.

The state government recently issued notification for online auction of nine more mining blocks which is the third auction notice in the last 15 days. The blocks, which would go under the hammer include seven iron ore, one each iron ore and manganese and manganese block.

The lease validity of these iron and manganese ore blocks notified for auctions is expiring by March 31, 2020. Steel players, sponge iron ore producers, pellet manufacturers and pig iron makers along with leading merchant miners are expected to bid aggressively for these blocks and place steep premiums to acquire these mines where production hopes to take off seamlessly.

The state government could not auction a single block during 2018-19 financial year due to legal and other issues.

Earlier, the state government has put 20 working mines on auction in two phases as lease period of these blocks would end on March 31, 2020. On October 4, notification was issued for auction of seven iron ore and three iron ore and manganese blocks while another notification was issued on October 14 for auction of five iron ore, three iron ore and manganese and two manganese blocks.

“The floor price is fixed at 15 per cent for iron ore blocks with deposits of up to 10 million tonnes and 25 per cent for higher quantum of deposits. Higher reserve price will spur more revenue for the state government. Besides, all these mines are ready to operate with associated infrastructure for smooth movement of minerals. Amid all these congenial factors, both merchant mine producers and end users looking to grab mine for captive use are expected to pledge higher premiums. Our estimates suggest that over the 50 year lease period, Odisha could end up garnering Rs one trillion from these 20 blocks opened up for bids”, said a mining industry source.

Meanwhile, the government has prepared a list of as many as 40 mining blocks for auction by the end of 2019-20 financial year. Notification has been issued for auction of 38 blocks in five phases between July 31 and October 18. Two other blocks – one each chromite and iron ore block– would be reserved for two state PSUs,” said a senior mines department official.

Sources in the steel and mines department said many top mining players of the country are expected to participate in the auction process as several iron ore blocks are put on auction.

Since a large number of iron ore blocks are concomitantly offered for auctions, the Odisha government has pegged the reserve price for bids on a higher side. And, higher floor price is expected to hike the cost of mine acquisition and bolster the state coffers.

Bidders who would successfully get the working mines can operate the blocks immediately after obtaining necessary statutory clearances while successful bidders of virgin area mines would have to address issues like land acquisition for development of road and other logistic infrastructure, rehabilitation and resettlement and obtaining necessary clearances.